Michael Hailu

If you were a farmer in Europe or the US, you would have an open line of credit with your bank to use for buying inputs or even equipment. If you were a Brazilian farmer, and wanted to buy inputs on credit, you could issue an ‘I owe you’ note to your supplier, who in turn would redeem it at the bank. Some Indian banks have introduced products, such as warehouse receipt finance, that permit them to issue (as one advertised) “commodity- backed loans in an instant, at unbelievable rates.” But, in most African, Caribbean or Pacific countries, farmers face difficult financing conditions. The vast majority of smallholder farmers have no access to commercial bank lending, and the share of agriculture in banks’ loan portfolio tends to be in the low single digits. In countries like Kenya, Rwanda and Uganda, less than 10% of farmers have access to formal credit. In Ghana and Nigeria, less than 4% of commercial bank loans are for agriculture.

But it need not be that way. Reasons given for denying credit are often mere excuses. If best practices in ICTs, loan products, risk management methods, and in regulatory policies were applied, ACP farmers would be able to convert their control over productive assets into easy access to credit. The private sector, government decision-makers and international development partners should join hands to upscale these best practices. To catalyse this process, CTA and its many partners will gather delegates from around the world from 13 to 18 July 2014 in Nairobi to decide how to ‘Revolutionise Finance for Agri-Value Chains’. You too can be part of the revolution.

Michael Hailu
Director – CTA



 
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